OPINION:
TOPIC: Associates; Of Counsel
Relationships.
DIGEST: An attorney engaged by a
law firm on a non-exclusive, per diem basis cannot properly be
referred to as an "associate" of the firm. Whether the
attorney may be referred to as "of counsel" to the firm
hinges upon the existence of a close, regular and personal
relationship between the attorney and the firm.
CODE: DRs
1-102(A)(4),2-107(A),5-107(A)(1);ECs 2-13, 2-22, 4-2.
QUESTIONS
1. May a law firm that retains an
attorney on a non-exclusive, per diem basis, properly refer to
the attorney, on its letterhead, for billing purposes and in
other settings, as an "associate"?
2. Alternatively, may the firm
refer to the attorney as "of counsel" to the firm?
OPINION
A law firm retains an attorney on
a per diem basis. Although the attorney works for the firm on a
continuing basis and plays a significant role in meeting with
clients and handling client matters, the attorney does not work
exclusively for the firm, and spends only between 10-15 hours per
week on firm matters. The firm asks whether on its letterhead,
for billing purposes and in other settings it may refer to this
attorney as an "associate" or, alternatively, as
"of counsel" to the firm. We conclude that an attorney
engaged on a non-exclusive, per diem basis cannot properly be
referred to as an "associate" of the firm. Whether the
attorney may be referred to as "of counsel" hinges upon
the existence of a close, regular and personal relationship
between the attorney and the firm.
Associate
Although the New York Code of
Professional Responsibility does not define
"associate," the term has been interpreted by courts
and other ethics committees to mean a salaried lawyer-employee
who is not a partner of a firm. The Florida Bar v. Fetterman,
439 So. 2d 835 (Fla. 1983); Samuels v. Montgomery, 793
S.W.2d 337, 340 (Tex. Ct. App. 1990) ("To be an
'associate' she would be on the payroll of a law firm as an
employee"); In re Sussman, 405 P.2d 355, 356 (Or. 1965)
("Principally through custom, the word [associate] when used
on the letterheads of law firms has come to be regarded as
describing those who are employees of the firm"); ABA 90-357
(the status ordinarily conveyed by the term "associate"
is "a junior non-partner lawyer, regularly employed by the
firm"); Illinois 657 (1980) ("an 'Associate' is widely
understood to be a salaried employee of a law firm who takes
direction from the partners or members of the firm"). See
also ABA 88-356 ("the term 'temporary lawyer'. . . does not
. . . include a lawyer who works part-time for a firm or full
time but without contemplation of permanent employment, who is
nevertheless engaged by the firm as an employee for an extended
period and does legal work only for that firm. That person's
relationship with the firm, during the period of employment is
more like the relationship of an associate of the firm.").
Because the word
"associate" has acquired this meaning, the use of the
word to describe lawyer relationships other than that of
employer-employee or to refer to a lawyer who does not work
exclusively for a firm is likely to be misleading. See EC 2-13
("In order to avoid the possibility of misleading persons
with whom a lawyer deals, a lawyer should be scrupulous in the
representation of professional status. A lawyer should not hold
himself or herself out as being a partner or associate of a law
firm if not one in fact . . . ."); see also Illinois 657
(1980) ("a person who maintains a separate and independent
practice and who gets assignments from a firm from time to time
would be misleading the profession and the public to call himself
an 'Associate' of that firm"). Because the per diem attorney
in question does not work exclusively for the firm and is paid to
work only on specific matters, the attorney cannot be considered
an "associate" of the firm and cannot properly be
referred to as such. n1
n1 This conclusion applies not
only to letterhead, business cards, announcements and other
public communications, but in other contexts as well. Thus, the
firm may not refer to the per diem attorney as an
"associate" for billing purposes. Clients who are
billed for the per diem lawyers' services as if they were
associates may reach unwarranted conclusions regarding the nature
of the relationship between the firm and the per diem lawyer.
Likewise, the firm may not refer to the attorney as an
"associate" of the firm in client meetings. Use of the
term associates to refer to the attorneys who are not truly
associates of the firm would be false and misleading and
therefore violative of DR 1-102(A)(4) (prohibiting "conduct
involving dishonesty, fraud, deceit, or misrepresentation").
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Of Counsel
The per diem attorney may still be
considered "of counsel" to the firm. The principal
characteristic implied by the title "of counsel" is a
"close, regular, personal relationship," but not one of
a partner, principal of a professional corporation or associate.
N.Y. City 1995-8; ABA 90-357; ABA 330 (1974). See also N.Y. City
81-3 (1982) ("of counsel" designation permitted only
where there is a close, continuing, regular and personal
relationship or there is a "present day-to-day working
familiarity with the affairs of the law firm in question").
As noted in N.Y. City 1995-8, the "of counsel"
relationship may not, however, be used to designate a
relationship that arises "by the mere referral of business
between firms or an occasional consulting relationship,"
N.Y. City 891 (1977); see also ABA 90-357; ABA 330 (1974); or as
a result of consultation on one case, N.Y. State 262 (1972). An
"of counsel" designation must mean something more than
merely "a relationship involving only occasional
collaborative efforts among otherwise unrelated lawyers or
firms." See ABA 90-357.
Thus, the accuracy of the term
"of counsel" to describe the arrangement between the
firm and the per diem attorney depends on the relationship being
"close, continuing, regular and personal." Such factors
as the sharing of space and availability for consultation on a
regular basis are strongly indicative of the requisite closeness
of relationship, id., but not conclusive absent closeness,
regularity and a personal dimension in the relationship. See,
e.g., N.Y. City 81-109 (1982) (a relationship that consists
primarily of office-sharing or of forwarding or receiving legal
business is not on those facts alone sufficient to permit the
representation that a lawyer is "counsel").
The method of compensation is not
relevant to determining whether an affiliation between lawyers
may be designated as "of counsel". ABA 90-357. The fact
that the per diem attorney does not work exclusively for the firm
is also not in itself an impediment to an "of counsel"
relationship, since it is well established that a lawyer may be
"of counsel" to more than one law firm. Id. ("A
lawyer can surely have a close, regular, personal relationship
with more than two clients; and the Committee sees no reason why
the same cannot be true with more than two law firms. There is,
to be sure, some point at which the number of relationships would
be too great for any of them to have the necessary qualities of
closeness and regularity, and that number may not be much beyond
two, but the controlling criterion is "close and
regular" relationships, not a particular number.");
California 1993-129 (the number of "of counsel"
relationships in which an attorney or law firm may serve is not
limited by any strict numerical standard); Michigan RI-102 (1991)
("Although there is no ethical guidance regarding a maximum
number of such affiliations, it is difficult to conceive of a
situation in which a lawyer or law firm could establish numerous
"of counsel" affiliations and still maintain the
required close, regular and personal contacts with each
affiliated lawyer or law firm.").
If the law firm reaches the
conclusion that an "of counsel" designation is
appropriate, it should bear in mind that for purposes of
analyzing conflicts of interest, "of counsel"
relationships are treated as if the "counsel" and the
firm are one unit. N.Y. City 1995-8. The implication of the
"of counsel" relationship will be even more far
reaching if the per diem attorney is considered "of
counsel" to one or more other law firms; conflicts of
interest applicable individually to any of the firms or attorneys
would be imputed to all of them. ABA 90-357 ("In consequence
there is attribution to the lawyer who is of counsel of all of
the disqualifications of each firm, and, correspondingly,
attribution from the of counsel lawyer to each firm, of each of
those disqualifications. Therefore, the effect of two or more
firms sharing an of counsel lawyer is to make them all
effectively a single firm, for purposes of attribution of
disqualifications."). See also Nemet v. Nemet, 112 A.D.2d
359 (2d Dep't 1985), appeal dismissed, 66 N.Y.2d 602
(1986).
Other Observations
If the law firm reaches the
conclusion that the per diem attorney may not be referred to as
"of counsel," the firm should bear in mind that DR
2-107(A) prohibits the division of fees with another lawyer who
is not the partner or associate of the lawyer unless: (1) the
client consents to the employment of the other lawyer after a
full disclosure that a division of fees will be made; (2) the
division of fees is in proportion to the services performed by
each lawyer or, by a writing given to the client, each lawyer
assumes joint responsibility for the representation; and (3) the
total fee of the lawyers does not exceed reasonable compensation
for all legal services they rendered to the client. See also EC
2-22. n2
n2 This restriction would not
apply to the sharing of fees with attorneys properly designated
as "of counsel." Nicholson v. Mason & Cohen,
P.C., 192 A.D.2d 473 (1st Dep't), leave to appeal denied, 82
N.Y.2d 660 (1993) (although not literally embraced by DR
2-107, the "of counsel" relationship falls within the
"partner or associate" exception to DR 2-107); Texas
450 (1987) (DR 2-107 does not apply to the "of counsel"
lawyer's sharing in the law firm's legal fees).
In addition to a potential
fee-splitting problem if the per diem attorney is not "of
counsel" to the firm, the firm must consider the guidelines
set forth in our trilogy of formal opinions regarding
"temporary" lawyers. N.Y. City 1988-3, clarified, N.Y.
City 1988-3-A, modified, N.Y. City 1989-2. We specifically note
that the temporary (or appearing) attorney and the hiring law
firm have a duty to disclose the temporary nature of their
relationship to the client and to obtain the client's consent to
the participation of the appearing attorney. See N.Y. City 1988-3
(Guideline 7); N.Y. City 1989-2; DR 5-107(A)(1); EC 2-22; EC 4-2.
We also expressed the view that such guidelines should be
memorialized to the extent appropriate in written agreements
between the temporary attorney and the hiring attorney "to
assure that the law firm and temporary lawyer discharge their
respective obligations under the Code to their client." N.Y.
City 1989-2.
CONCLUSION
For the reasons set forth above,
the Committee answers the first question in the negative. As for
the second question, whether the attorney may be referred to as
"of counsel" hinges upon the existence of a close,
regular and personal relationship between the attorney and the
firm.
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